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P2P insurance and tontines: On the design of mutual insurance schemes
A traditional life or pension insurance contract usually guarantees a predetermined income for life. Recently, insurance providers like pension funds, employers or insurance companies tend to refrain from offering such long-term guarantees on investment or mortality risk as they are too costly. This has shifted attention to mutual risk pooling schemes like (modern) tontines, pooled annuities or group self-annuitization schemes where part of the risk is shifted to policyholders. This talk gives an overview of recent developments for such products and their design, both from a practical and an academic perspective. It covers aspects of risk sharing theory, the actuarial fairness of the schemes and the impact of heterogeneity on pool risk. Additional features like a long-term care rider or a premium-refund option are discussed.